Student Loans Archives - Page 2 of 9

Two-Year Anniversary Of Frugaling!

Discomfort: The catalyst for change

Two years ago, I sat in my then-girlfriend’s apartment in Manhattan Beach, California. Only a couple blocks from the Pacific Ocean, I felt like it was heaven on Earth. Frankly, I hadn’t found any place more relaxing and beautiful.

But that May 4th, 2013 was complicated for me. I was powerfully distracted by student loans. The numbers continued to worsen, and I wanted to stop the bleeding. The debt was hurtling towards $40,000. I was afraid I couldn’t or wouldn’t be able to reduce it as a graduate student.

Everybody in my life said they were proud of me — of making it to a Ph.D. program and helping others through counseling psychology. And yet, I felt hopeless to do anything about my financial situation. Doing good didn’t mean money followed suit.

I told my then-girlfriend that I was nervous. I told her I didn’t know what to do. I told her that when I was younger I used to write, blog, and share my thoughts. Maybe I could do that again?

Neither of us truly believed that writing could suddenly pay off my student loans and credit debt. I was green and naive, but my eagerness and openness pushed me into action.

The start of something good

With trepidation and giddiness, we sat down and talked about the idea of starting a website.

She asked, “What would you call it?”

We played around with some ideas — back and forth. Nothing really stuck. Or, when we liked something the domain name was invariably taken. Darn it! Maybe I was just too late in the game to join the personal finance community?

Then, as we decided to table the discussion, I suggested “Frugaling.” The name danced across my vocal cords and tongue with a playfulness, which also acknowledged finances. And there it was: available. I bought it immediately.

Energized, I sat down at the kitchen table and coded the basic structure of the website. I found a theme and we designed a header logo. The site was rough around the edges and certainly wouldn’t have won any design awards. With her help and my passion for personal finance, I wrote my first article. Half a day had rolled by, but it was live!

Would you marry me?

Initially, I asked my readers, “Would you marry me?” The question was bouncing around in my head ever since I was asked how much debt I had. I worried that having tens of thousands in student loans might hinder my chances at a loving, long relationship. Questions such as, “How would you provide for children?” or “How would you afford a mortgage?” stopped me in my tracks. I felt awful. After all, monetary concerns often break up marriages.

When I published that first article, I had four readers: mom, dad, bro, and Lisa. Each of them read the article, and supported my decision to start this website. Albeit, there was definitely some skepticism from them.

When I hit that “publish” button, I was awash with a familiar, but dormant, feeling. It was a rush of excitement and energy, which reminded me of a brief foray into opinion-editorial writing at my college newspaper. It had been years since I wrote publicly, and I was instantly hooked back in.

Over the coming months, a torrent of articles flew through my fingertips and onto the screen. I loved the feeling of being a writer, editor, publisher, and advertiser. I was doing it all in the cracks of free time that graduate school occasionally presented. And few even knew I existed. The love was in the process of writing, not the paycheck.

Shifting ideals, writing styles

To summarize and contain two years of thoughts, critiques, and articles is nearly impossible. The time period is collected and framed on this site for all to see. It’s a time when I hurt immensely, and saw few ways out of tens of thousands in debt.

My first articles were rudimentary. Inspiration came from other personal finance websites and, mostly, well-tread territory. Sadly, I’m not sure that I was providing earth shattering revelations.

Despite my skill level (or lack thereof), I enjoyed the process of sharing openly about debt. For the first time in my life, I wasn’t embarrassed, ashamed, and guilty about my choices in life. I was finally facing my demon.

As I continued to write, two things happened unintentionally:

First, my writing improved and developed a voice. I could write faster, and with greater clarity. My audience grew with every additional article. I learned how to write better by treating this process like a science. What worked? What didn’t? How could I improve my titles? How could I attract more diverse audiences?

Second, I noticed a missing element in the personal finance world. It centered on diversity. Many of the financial gurus and role models for debt-free living were white, middle-class, and had terrific educations. They didn’t represent the common person struggling with outsized credit and student loan debt. Writing about simple methods to save didn’t have the same caché. I wanted to appeal to an audience of disenfranchised and underrepresented. Suddenly, I took on more of a social justice role.

Look at how much I just made!

In late summer 2013, I climbed a popular trail in Steamboat Springs, Colorado. I looked down off the majestic mountain and saw only beauty. The summer sun basked upon me, and I soaked up the moment.

I had been writing Frugaling articles for about 6 months, and was enjoying a nice break from everything — school included. But there was a surprise awaiting me when my cell service came back. I was $500 wealthier.

Something must’ve gone wrong, I thought. How’d I just make about $500?! What happened? I checked my website and saw increased traffic to some key articles. People were actually taking up my advice and buying a product I was recommending. Four people had actually used my links!

I freaked out, and called the company that handled my ads. I immediately questioned the staffer, “Is this number right? Do you see this amount? Is this real money?” He calmly replied, “Yep, it looks good. We’ll just have you fill out some tax information because you’re going to be earning more than $600 this year.”

Over the next 12 months or so I would go on to make tens of thousands of dollars, repay my student loan debt, begin investing in retirement accounts, and create an emergency fund. My life was and will continue to be forever changed by this money. It felt like winning the lottery, and was completely unexpected.

The amount of money felt comical. Here I was, a naive, green graduate student with this crazy idea to start a website and write about my student loan debt. And the endeavor had rewarded me.

My out-of-debt mood

When the debt was squashed, my mood lifted. I saw my future with greater clarity, but more importantly, I recognized the importance of the present — this moment. The debt was this cloud that followed me around. I hated owing companies money.

Freedom comes to mind, but that’s too simple. Getting out of debt cemented a logic and rule change: don’t ever lend someone your future. I never want to be beholden to a behemoth bank again. From mortgages to car loans, I’m done.

Take your “age-old” advice and wisdom and shove it. That’s not for me. I’m a Millennial that has been caught up in a business-based system of higher education for too long. The debt that can incur is dangerous and restrictive. I don’t see “good” debt anymore. No, I just see debt.

If you forego the “features” and “great benefits” of debt-inducing products, life can be a bit more reserved and boring. I don’t travel often, I sold my car, and I tend to eat out once a month. Before my journey began, I was a crisscrossing world traveler, with a stunning car (and hefty loan), and ate out for the majority of my lunches. All on the take — with the interest running against me.

Debt is too frequently a cyclical problem that people unintentionally enter — myself included. Without debt, the cyclical problem cannot occur. Life will be restrictive for certain, but I won’t be working countless hours to pay back the moments I have now. And that’s worth focusing on.

Featured and published in big-time blogs

In time, Frugaling picked up steam. The traffic and subscribers increased as a result of featured articles and influential writers. Additionally, a massive viral article made the rounds of Reddit. There were over 100,000 views in a day! But even greater was the incredible honor of being shared by two of my favorite sites over these two years: Becoming Minimalist and The Minimalists. They were both inspirational in my writing.

The site is now growing exponentially. It’s rare to see a day with less than 1,500 visitors. There was a clear shift that occurred, where 5,000-visitor months became 5,000-visitor days.

I have an incredible group of over 1,000 email subscribers who contribute, comment, and email me. They’re involvement and commentary is vital — they keep me going. From Facebook to Twitter, people write their responses and experiences with depth and clarity. I’m impressed by their input, and humbled that they care to share.

Looking to the future of Frugaling

Frugaling has constantly been my “work in progress.” It’s never finished, I’m always tweaking the site and my writing style — trying to see what works and sounds best. The future of Frugaling is something that brings me great joy to think about.

Over the coming months, I will be announcing my biggest project yet for the website. I’m hoping you’ll subscribe to see what happens next, and help share the news when I announce it.

I’m excited and grateful to have an outlet like this, where I can share my thoughts, opinions, and lessons with an incredible audience. Thank you for being one of them. It’s a home for me to sharing about social justice, making and saving money, and avoiding the traps of debt.

We only have so much time in our days and lives. Your time is precious. I want to thank you for taking the time to read, subscribe, and comment.

Your friend,
Sam

My Low-Income Lifestyle

By Frugaling 57 Comments

Let’s start with my monthly salary

“I’d like to live as a poor man with lots of money.” —Pablo Picasso

I get paid $1545 after taxes on the 1st of every month. That’s my salary for working at the university, and being a graduate teaching assistant. Over 12 months that comes out to about $18,540.

For a single person, that places me about $7,000 above the federal poverty line of $11,490. You’d think I live a pretty comfortable, financially solvent life. And for the most part, I do.

I’m not in poverty. I never go hungry for long. I’m afforded incredible learning and writing opportunities. I can pay for shelter without any concerns. I’m lucky not to have any dependents or pets. I’m not on the brink of losing this consistency of life.

A tight monthly budget, but positive

Here’s what my monthly budget looks like:

Paycheck: $1,545 per month

Rent: -$550 (Housing in Iowa City is surprisingly expensive. This price bundles Internet/Cable, as well).
Utilities: -$50 (Varies month-to-month, but on average…).
Student fees/tuition: -$346 ($1251 per semester (x2), and then summer tuition (not covered) at $1650 for 3 credits — all divided by 12).
Food: -$400 (working to lower this, but in the past…)
Gas: -$5 (I don’t drive, but occasionally I give friends money to carpool with them)
Total costs: $1,351 per month

Partial budget: $194 per month

Notice that within this budget, entertainment, travel, and car expenses are not present. It’s difficult to approximate how much I spend on entertainment (going out to movies, playing pool, or bowling), but I’d say it averages about $10-20 per month.

Because I sold my car, I no longer have registration, titling, gas, insurance, maintenance, or car loan payments. Although, flights still happen and those cost about $300-400 round-trip. I fly about once or twice a year nowadays. Conservatively, that’s about $600 per year, or $50 per month. Subtracting these costs, and the following is my total budget:

Total budget: $124 per month.

If I stay within this budget and repeat it monthly, I can save about $1,488 per year. But that’s only if there are no other fees, expenses, or emergencies. For instance, my computer is hugely important to my business, job, and schooling; if that were to fail, I’d be in deep trouble. A single incident could wipe away my savings for a year.

Macro Money Photo — *Photo: Kevin Dooley/flickr*

Settling into the low-income lifestyle

While I might not be in poverty, I lead a low-income lifestyle with little room for error. Now that I’m no longer in massive student loan debt, my monthly budgets are real and accurate — not manipulated artificially by financial aid. When I run out of money, it’s gone — there’s no reserve ready. If something happens, emergency funding may be found using title loans or other secured lending options.

As I paid off my student loans and stopped withdrawing additional credit, I developed and settled into a low-income lifestyle. It’s one without exotic vacations, weekend getaways, cars, fancy dinners out, and the latest gadgets.

Now, I hold onto things longer, avoid purchases, and cook at home whenever possible. But it took me a while to adjust down — to slow down, really. I’ve said this before, but debt fostered an illusion of success that I felt compelled to uphold and continue. I wanted to show people that I could “afford” to treat, spend, and enjoy. Unfortunately, it was all a mirage. I was swimming in debt and stress.

Reflecting on the pros and cons

Pros

1. No more debt (or very little)

I no longer take out student loans to cushion my budget. Every month I do have revolving credit from regular purchases, but my balance is paid in full each statement period.

2. Support from family and friends, community

People check in with me more than ever about how I’m doing with my financial goals. Additionally, friends have increasingly begun to ask questions about how they, too, can save.

3. Greater exercise

Now that I sold my car, I take buses, walk, and/or ride my bike. Altogether, I’m getting way more exercise over owning and driving a car.

4. Empathy for lower-income and impoverished populations

Living closer to poverty and working with the homeless population has been an interesting combination. While I have great educational privilege, I do not have any income to show for these “achievements.” For now, this lack of money has helped me try to empathize with those less fortunate than I.

5. Reduced environmental impact

Despite America’s capitalistic ideals, we are doing the planet great harm with our consumption. Without any money or vehicle, I’ve drastically reduced my environmental contribution to greenhouse gases.

6. Eat healthier

To stay within my food budgets — and reduce them even further — I’ve been making more food at home and avoiding fast food alternatives.

7. Provides motivation for stories, articles

Living this low-income lifestyle provides great fodder for stories and reflection. Simply put, I learn every day from it. Comfort can sometimes make us complacent and inure us from others’ struggles. Stripping away income has provided deep insight into income problems in America.

8. Increased appreciation for what I do have

For everything I must sacrifice with my tight budget, there’s far more that I have, which I’m deeply grateful for. From health of friends, family, and myself to comfortable shelter, I am privileged.

Cons

1. Restricted travel

I used to travel all over the country. I loved seeing new places, eating different foods, and meeting new people. Instead, I’m mostly here in Iowa City. Traveling is too expensive — other than to see family a couple times per year.

2. Less time with family

I’ve added hours at work to receive more income. Between that additional time and aforementioned restricted travel, I don’t get to see my family as much as I’d like.

3. Awkward date conversations

While I’ve grown to embrace my low-income lifestyle, I can’t afford to go out with people too frequently. When I go out on dates, I’ve noticed that gender norms about who treats still seem to hold strong — the man is expected to step up.

4. Susceptible to emergencies/unexpected costs

If my computer stopped functioning or I had an injury, I may lose the budget surplus. This precarious balance threatens all my financial goals.

5. Psychological toll and nervousness

Being at this level of income takes a psychological toll. I’m working a large number of hours each week for relatively little pay. That’s stressful.

6. Society doesn’t seem to understand

Graduate students made great progress over the last few decades to have their educations paid for through assistantships and fellowships. But skyrocketing tuition has held back graduate funding. State and federal funding has consistently been in jeopardy.

7. Guilt when overspending

When I do spend money outside of the budgeted amounts, I feel tremendous worry and guilt. This emotional reaction sometimes stems the tide of purchases, but also makes me wish for days of financial security.

8. Tiring, test of willpower

Last, but certainly not least, it can be tiring. Following this strict of a budget takes an immense amount of willpower. Unfortunately, willpower is deeply tied to energy levels. With less energy, willpower tends to decline, as well.

American College Students: In Debt, Distracted, And Doomed

By Frugaling 9 Comments

Being a teacher and instructor in college is more challenging than ever. Nervous eyes take glances at iPhones, quickly minimize Facebook apps, and craft rapid text messages. Students are unbridled in their distraction. They look uncomfortable sitting still.

As a college instructor for about 4 years, I’ve become increasingly aware of fellow educators expressing frustration over “lazy” students that multitask. Some educators ban smartphones and iPads during classes. Others call out students that text in class, and ridicule them in front of peers — aiming towards social conformity.

Unfortunately, technology is serving as a scapegoat for something worse. Teachers want to limit these technological forms of distraction to heighten learning for everyone, but this classroom management strategy misses a fundamental problem. Today’s students aredistracted, but their attention problem results from atmospheric student loan debt and poverty.

The American Dream and business of higher education

Built in to our ailing economy and concrete erections is a fundamental dream: hope for a better life. It’s why many emigrate here.

While achieving that success is attained through various methods, college still serves as the number one predictor of middle class life. High school graduates make a median salary of $651. By attaining a bachelor’s degree or higher, individuals make a median salary of $1,108.

For decades, the message has universally been towards greater higher educational attainment. Generations of students, employees, employers have followed this rule — requiring college educations and encouraging people to get at least a bachelor’s degree. Now, about 32% of Americans have college degrees.

Guidance counselors ask high school and college-aged students to envision anything they want to accomplish. Fundamentally, they ask, “What do you desire?” and “What would you like to do if money were no object?”

But money is an object, and we are controlled by its properties — through empowerment or restriction. These questions of freedom tease students with a reality that doesn’t exist.

Student loans restrict, constrict, and destroy choice

Many will graduate with nauseating student loan debt. Heck, there’s $1.2 trillion right now! For class of 2013 college graduates, the average student loan debt was nearly $30,000. With that amount of debt and interest rates that vary from 3.86% to 7.21%, today’s graduates don’t have the freedom that’s espoused and propagated by higher education and mainstream media.

The problem gets compounded as “student tuition now outweighs state funding at public colleges.” Now, state taxes and revenue sources are contributing to even less of the total cost for students. This all flies in the face of socialistic policies in many European countries that have highly progressive, free (tax-supported) higher education.

Americans place the burden on students as young as 17 to make educated decisions that could affect the rest of their lives. Faltering in payments and failing to swiftly pay off the debt can lead to forbearance, default, skyrocketing interest rates on credit cards, and more. Credit scores and future livelihood are at risk.

Educating the desperate, sleep-deprived, and in debt

The interest is already ticking for many before graduation. Students can feel eager to get a job, get paid, and pay off debt. But even before they graduate, they must ask themselves some serious questions:

Should I work during college?
Should I take more than a normal credit load each semester to finish faster?
Should I skip study abroad opportunities that cost more and may extend my time?

Previous generations had the incredible luxury of minuscule tuition rates. Between 1978 and 2013, college tuition and fees grew by an overwhelming 1,225%. Simply put, college cannot be paid for with summer jobs and temporary work.

To the financially disenfranchised, student loans fill the gap for access. But there are still students that work during college. I had two jobs while also a full-time student, and there are many like me.

Then, there are students with disabilities, children, and veterans of foreign wars (to name a few). They are challenged to keep paying utilities, attain an education, and somehow keep a roof over their children’s heads. Again, student loans often serve as a mediator to accessing education — a temporary source of funding to attain a better income and vocational future. But real dreams can subtly disappear from view as financial aid bills take precedent.

Student loans magically appear, as do depressed dreams

Like many of my readers, I’ve worked hard to turn around my financial future. When I was in debt, I felt horrible. I spent money without concern and bought things I couldn’t afford. My debt was the illusion of success.

When I finally stopped to breathe in May 2013, I realized I had dug a hole nearly $40,000 deep. I was embarrassed with what I had done, and who I’d become. I wondered what I could do to reverse this dangerous course. Trust me when I say this is a common problem for many students.

Financial aid usually was deposited into negative balances at universities and then extra amounts were distributed to the individual student’s bank account. Suddenly, bank accounts were flush with thousands of dollars — budgets seemed irrelevant.

Everyone from the in debt to the creditors to general public confuses these loan instruments for real cash. Yes, you can spend student loans however you see fit, but the consequences are punishing. Every dollar is taxed by the current loan interest rate, and is a dollar in the wrong direction: towards poverty.

The problem of poverty in college-age students

Unlike the clarion calls that suggest America is number one, we seem to have created a master plan for educational failure. Research suggests that “poverty, itself, hurts our ability to make decisions about school, finances, and life, imposing a mental burden similar to losing 13 IQ points.”

By saddling our future graduates with nearly $30,000 in average student loan debt and a future of near poverty for many, we are hurting their ability to learn in the process. Lower-income and impoverished populations constantly report lower amounts of sleep, vocational uncertainty, higher stress, and show evidence of hindered decision-making capabilities.

These are the students of today. They are trying to succeed in a cultural landscape that begged them to get educated, punished them for getting that college degree with years of debt payments, and then limited their employment options.

As the dreams fade due to financial concerns, anxiety and distractedness likely increase. The dream of “What’s your purpose?” can quickly be replaced with “Who will hire me?”

We want bright, capable graduates, but we “victim blame” them instead

America is eager to have the best workforce in the world. We are a nation that aims to be a beacon of hope and role model to developing states. And yet, we are breeding and cultivating some of the most in debt, distracted, and impoverished students.

It’s not in the interest of this country, the world, and future progeny to continue this wicked cycle of educational attainment and poverty. It’s not in the interest of creating a bright, educated populace to have them cowering in poverty for doing so. It’s not in the interest of America to impair decision making in finances and education in the process.

As teachers express frustration for their distracted students, they need to fundamentally understand the complex, systemic interplay of student loan debt. This financial instrument is inherently complex and can psychologically impair the most capable students. They might not be able to pay attention because they’re burdened by a future of poverty, student loan debt, and restricted opportunities.

Something needs to change. This system isn’t sustainable. Fortunately, a small light of hope might be on the horizon.

Post by The White House.

President Barack Obama recently announced a massive initiative to empower those from diverse financial backgrounds to receive a “free” education. His plan includes funding community college educations for those working part-time and maintaining certain educational requirements. Over the coming months this will be hotly contested and debated. But this is the first step, in what needs to be many, for those in need of an education that’s truly accessible and affordable.

Students cannot continue to shoulder most of the burden. There are powerful inequalities in income and wealth — educational opportunities shouldn’t be one of them. If we can muster the courage and wherewithal to increase taxes towards education, we may see what America is truly made of.

Get a 10% Tax Refund Bonus with TurboTax 2014

By Frugaling Leave a Comment

Tax season is nearly here! Over the last few months I’ve worked tirelessly to reduce my tax liability. One method I’ll use to receive an even larger bonus will be Amazon.com’s partnership with TurboTax. TurboTax is the leading tax preparation software and offers some of the best features for receiving your largest deduction ever. But for every dollar of my refund I put towards an Amazon gift card, I’ll get an extra 10% from Amazon!

For instance, if you receive a $1500 tax refund and download TurboTax from Amazon.com, you’ll be able to put up to $500 to a gift card with the 10% bonus! That can quickly give you an extra $50 for doing your taxes. By receiving the $50 Amazon.com tax refund bonus, you can effectively pay for the cost of TurboTax Deluxe 2014. And heck, Amazon can sometimes help us stay frugal!

What I like about TurboTax:

TurboTax is an Intuit product (they own Mint.com, too)
It automatically calculates deductions and checks to make sure I’m getting the largest refund possible
The company works with collegiate expenses and student loan payments to save even more money
Each year’s refund and return is collected for the next year, which saves a ton of preparation time
The program includes state and federal e-files for rapid returns and paperless refunds
By downloading from Amazon.com, it includes 5 free federal tax return files
Using TurboTax is a terrific preventor of getting audited, as it checks to make sure you’ve included everything
Instant download for Macs and PCs

Follow this link to get this year’s version: TurboTax Deluxe Fed, Efile and State 2014 with Refund Bonus Offer